Goldman Sachs fights back by putting $3 billion on its hedge fund


Goldman Sachs Group Inc. lined up $3 billion in new capital to bolster its Global Equity Opportunities Fund after it lost $1.4 billion, or 28 percent, in the past two weeks.

New investors include Maurice ``Hank'' Greenberg, the former chairman of American International Group Inc., hedge-fund manager Perry Capital LLC and billionaire investor Eli Broad, the New York-based company said today in a statement. Goldman will also invest in the fund, whose assets dropped to $3.6 billion from more than $5 billion in July.

``We believe the current values that the market is assigning to the assets underlying various funds represent a discount that is not supported by the fundamentals,'' New York- based Goldman said today in the statement. `` The investment will also provide the fund with more flexibility to take advantage of the opportunities we believe exist in current market conditions.''

The Global Equity fund's computer-driven investment strategies were disrupted by turmoil in the financial markets triggered by declines in subprime-mortgage bonds. Other so- called quant managers posting losses include AQR Capital Management LLC, Highbridge Capital Management LLC and New York- based Tykhe Capital LLC.

Hedge funds are largely unregistered pools of capital that cater to wealthy individuals and institutions and allow managers to participate substantially in profits from investments. They try to make money in rising as well as falling markets.

The $1.7 trillion industry has been roiled in July and August as credit spreads widened to the most in two years and U.S. stocks rose or fell by more than 1 percent on 13 days.


TradingEconomics.com, Bloomberg
8/13/2007 6:40:30 AM